1.Business Activities

1.Business Activities 2.Marketing and Sales 3.Market Analysis 4.Labor Relations 5.Long-term Investments 6.Personnel Growth over the Last Three Years 7.Environmental Protection Measures 8.Important Contracts 9.Litigation Proceedings 10.Y2K Readiness Program

(1) Business Scope

TSMC is dedicated to practicing business at the highest level of integrity and maintaining a single-minded focus on the IC foundry industry. The company provides new product implementation and advanced IC manufacturing services of the highest quality to the worldwide semiconductor industry. Building on our core competencies of manufacturing excellence and attentive customer support, we offer a full range of manufacturing services on a broad range of technologies, including wafer manufacturing, wafer probing, assembly and testing, mask production, and design services. Wafer manufacturing accounted for about 90% of 1998 total revenue.

Over the past 11 years, customers have utilized TSMC's manufacturing services for a wide variety of end-product applications. We estimate that in 1998 TSMC produced approximately 3% of the world's IC supply.

(2) Customer Applications

Advanced ICs produced for customers by TSMC are used in a broad range of the end-product applications, including computers, internet appliances, communication systems, consumer electronic products, automotive and industrial equipment.